Glossary

If you have acquired a health insurance plan or thinking of purchasing one it is important for you to get familiar with the various definitions and terms used in relation to Health Insurance. Following glossary may be of certain help for you to understand the language of Health Insurance.

Actuary: AQ person who helps the company to calculate the amount of premium that should be charged by the company. He is responsible to ensure that profitable premiums are determined.

Admitting Privileges: Doctor’s right to get the patients admitted to a particular hospital.

Agent: An authorized/licensed person representing the company and introduces company products to the customers.

Benefit: Amount payable by the insurer to the claimant or assignee in case of loss to the plan holder.

Broker: A person who is licensed by the insurance company to obtain quotes and plans from various sources for their clients.

Carrier: Agency providing health insurance plan.

Case Management: A system designed to enable clients to receive appropriate medical care, by employers and insurance providers.

Certificate of Insurance: A written document providing information regarding coverage, benefits and payment limits and method of premium payments.

Claim: A request made by policy holder or assignee to the insurance provider for payment/reimbursement of medical expenses paid by him.

Co-Insurance: It is an amount you have to pay for medical services. Co-Insurance is also referred to as ‘Co-payment’ in some plans. Usually, co-insurance is denoted by a percentage.

Credit for Prior Coverage: It is applicable especially when you shift from one insurance plan to another or one employer to another. In such case your existing coverage may be permitted to retain by new plan provider during the waiting period.

Deductible: It is an amount that is mandatory for the individual to pay for before commencement of insurance cover. Most of the insurance plans are based on yearly deductible amounts.

Denial of Claim: Refusal of the insurance provider to make payments for expenses incurred by its client on medical care.

Dependents: Includes spouse and children (unmarried) of the insurance plan holder.

Effective Date: Actual date of commencement of your insurance plan. You can not claim any ser4vices before this date.

Employee Assistance Programs (EAPs): Counseling services, specifically mental health counseling, provided by employer of insurance provider. You need not to make direct payment for acquiring counseling under this program.

Exclusions: Health services which are not included in your health insurance plan.

Explanation of Benefits: A written document describing the payment details to be made by individual and the insurance provider.

Generic Drug: In simple words it is a substitute drug used in place of brand name drug. Usually generic drug is used when patent of the brand name company runs out and same drug is produced by other companies.

Group Insurance: Insurance coverage to all members of the group by the employer.

Health care decision counseling: These are nothing but the tips provided by employer or the insurance provider to help him making the decision to adopt a particular plan. These tips include information on advantages, draw backs, costs, list of medical treatments and tests covered under the plan and costs. This is a good way to allow a potential insurance seeker to choose the plan of his desire.

HIPPA: It is abbreviated form of Health Insurance Portability and Accountability Act. This is a federal legislation passed in the year 1996. This legislation permits individuals to become eligible for health insurance coverage immediately after they switch over the employer. It also caters for authority to lay down standards for health care data through electronic exchange. This also guides on setting of standardized medical and administrative codes that are to be used for identification systems aimed at patient’s health care, payers and insurance providers or sponsors. The legislation also caters for provision of different types of measures that are required to be adopted for protection of privacy and security of individually identifiable medical care.

Indemnity Health Plan: These are also known as ‘fee-for-service’ plan. These types of plans are very rare now days. These plans existed prior to introduction of HMO, PPO and IPA. Presently HMO, PPO and PO plans are referred to as indemnity plans. In indemnity plan you have to pay pre-determined part amount of premium of the health care services. The left portion of the premium is paid by your employer or insurance company. Fee for medical services is determined by insurance providers and varies from one doctor to another. These plans offer you freedom to select your health care provider.

Individual Health Insurance: As is evident from the nomenclature, this type of plan is designed to cater for individual medical care needs. Premium of individual health plan is considerably higher when compared to group insurance premium.

Independent Practice Associations: These plans are identical in nature to that of MHO plans. Only difference between an HMO and IPA is that you get medical care in office of the physician unlike HMO where you have to go to a HMO affiliated doctor or hospital.

In-network: It includes all health care providers and facilities that are part of network of the health plan. Usually such facilities and providers are discount negotiated by the insurance company. You pay considerably lower fee while acquiring medical care from these in-network (affiliated) providers as these providers render their services at subsidized costs to the insurance companies on contract basis.

Maximum Life time Benefits: It denotes the maximum amount which the insurance company will pay to the policy holder during his lifetime.

Limitations: Restrictions laid down for payment of benefits on a particular expense. Usually, these limitations are endorsed on certificate of insurance.

Long Term care policy: As is understood these policies cover certain services for certain decided period. The time period of effectiveness of these policies and costs of policies are different for different plans. Services covered under these policies include home medical care, hospitalization (custodial care) and nursing care.

Long term disability insurance: In this type of plan insurer has to pay a certain percentage of insured’s monthly income when the insured becomes disabled.

LoS: It stands for Length of Stay. This term describes the length of hospitalization or in-patient treatment period spent by the policy holder. Usually, this term is used by employers and insurance companies.

Managed Care: A system designed for management of cost and quality of the medical services received by the individual. Many managed care systems advise their clients to prefer HMO and PPO as their health care services. One of the features of the managed care system is that some of plans of this nature give more emphasis on preventing diseases.

Medigap Insurance Policies: These policies are issued by private insurance companies. These policies cover certain services which are not covered by Medicare or Medicaid policies.

Multiple Employer Trust (MET): A trust formed to facilitate purchase of group health insurance for employees. It may consist of number of small employers of same category. A trust may establish its own health insurance plan which may provide health services to its affiliated members at considerably lower cost.

Network: List of health care providers and hospitals affiliated to the insurance provider, for providing medical services to their clients. Usually, fees charged by network doctors and hospitals are lower than that charged to non-insurance holder. A network can be wider in both, in terms of geographic area as well as medical facilities. You get the benefit of paying lesser fee when you visit a network doctor.

Open-ended HMO: A traditional indemnity plan which provides facility to avail medical care facilities from a non affiliated medical care provider and pays either full amount or portion of the expenses for your such medical services.

Out of pocket maximum: It is an amount that you have to pay for your medical services, from your own resources. Usually this amount is pre-determined. This amount is to be paid by you before your insurance provider pays full amount of your health expenses.

Outpatient: Refers to an individual availing medical care services without being admitted to hospital. Some insurance companies have their list of medical procedures and tests which are covered only when you avail it without hospitalization. Some minor surgeries are also included in this list. The term is also used to describe the place where medical facilities were availed by the participant.

Plan administration: This includes activities like establishing and running a health insurance plan. Activities like enrolling individuals, answering queries, collecting premiums and billing are also part of plan administration.

Pre-admission Certification: It denotes the concurrence of a health provider or case manager or a representative of the insurance company for admitting an individual to a hospital or inpatient medical service. This concurrence is granted before the individual is admitted. It is responsibility of the individual to obtain the pre-admission certification. However, some doctors do it for you by contacting concerned people. The pre-admission certification is aimed at avoiding unwanted medical services.

Pre-admission Testing: Medical tests carried out before an individual is admitted to a hospital.

Pre-existing condition: It denotes that the individual’s health condition existed when the individual obtained the health care policy and such condition is not covered by the plan.

Preferred Provider Organizations (PPOs): These organizations provide you facility to obtain subsidized cost of medical care from selected group of medical service providers. You have to pay more for your medical care if you avail medical services of a doctor or hospital which is not in the PPO network.

Primary Care Provider: A medical service provider responsible for ensuring health care requirements of an individual. Usually, a physician is nominated for this purpose. He can refer you to a specialist for specialized treatment and your insurance company will pay for such specialized service expenses.

Provider: A person who provides health care services. At times the term is used in reference to physician. Apart from physician term ‘Provider’ includes chiropractors, physical therapists, nurses, other professionals offering health care services.

Reasonable and Customary Fees: It denotes the fees usually charged by health care providers in that particular geographical area. When used in reference to health plans it means the amount that will be approved by the insurance company as expenses made by the policy holder on account of specific medical procedure or tests. If your expenses are greater than the approved amount, you have to pay the difference to the medical care provider. However, some providers follow the fees structure that is approved by the insurance companies as customary and reasonable fees.

Rider: A written document describing amendments made to the provisions and clauses of certificate of insurance.

Risk: Deciding the loss, intensity of loss and amount of possible loss to the insurer. When used in reference to individual it means probable likelihood of medication’s side effects or complications arising out of surgery and other medical procedures. To illustrate, smokers are considered to be on higher risk of developing cancer.

Second Opinion: It is the view of the second medical practitioner on an individual’s health condition which is given by him after individuals has been diagnosed by one physician and has recommended for surgery. Usually, individuals are advised to obtain a second opinion whenever a medical practitioner diagnosed with some serious medical complication or has been recommended surgery.

Short Term Disability: It denotes that the disability is temporary in nature and individual will be away from his working for shorter period of time. This ‘shorter period’ varies from one employer/insurance companies to another. The main aim of the provision of short term disability clause in health insurance plan is to protect either full or part of individual’s wages during his sickness or injury that has made the individual temporarily disabled.

Short-Term Medical: Temporary or short duration health care coverage for an individual. Usually this period is between 30 days and six months.

Stop-loss: It is a stage when you have reached the maximum limit of out-of-pocket amount of co-insurance on your medical care expenses and insurance begins to pay after that.

Triple Option: You have three options for choosing a suitable health insurance plan. These options are HMO, PPO and traditional indemnity plans.

Underwriter: Health care insurance company that is responsible for issue of certificate of insurance, collects premiums and responsible for risk.

Waiting Period: In this period no insurance coverage is provided to an individual due to particular problem.